Trump Will Destroy the Economy

Look at a Trump presidency purely in the context of dollars and cents and tremors of fear set in.

Trump wants to slash tax rates, which, he and other believers in fairy tales, will set off an explosion of economic growth. They aver growth will flood federal coffers with money to pay for a war against ISIS as well as the estimated $400 billion to $600 billion to fulfill his pledge to deport all illegal immigrants currently in the U.S.

Unfortunately for Trump and the other myth-makers, cutting taxes achieves nothing more than lower revenue. Ronald Reagan slashed taxes and tripled the national debt.  The Bush II tax cuts racked up a $3.29 trillion deficit and stuck Barack Obama with a budget that added another $1 trillion during his first year in office.

OK. So Trump will just have to trim the bloated federal bureaucracy to even things out. Won't work. According to the Center on Budget Policy and Priorities, non-defense discretionary spending in 2015 was $585 billion, or just 15 percent of the total. Perhaps we should have a national plebiscite on which parks to close, what roads should go un-repaired, whose crop subsidies should disappear and how many border patrol agents should be laid off.

What about Trump's capitalist cronies? According to a wide range of news reports, he scares the crap out of them. The money guys can thrive in any number of environments but start to get nervous when uncertainty is the order of the day. And no one has ever tried to argue the name Trump is a synonym for stability. "From an economic an market point of view, a Trump presidency could be a disaster," Barry Randall, a tech portfolio manager for Coverstor told U.S. News. Is it any wonder that Wall Street money mavens backed Hillary with  $21.4 million by the end of 2015 to back Hillary?

Trump has already turned off much of the world and not just  because of his crassness and ridiculous hair. He has proposed a 45 percent tariff on manufactured Chinese goods. China is expected to surpass Canada as the U.S.'s largest trading partner this year. It also holds more than 7 percent of the debt incurred by tax-slashing Republicans.

Oh, well.

More Jobs, More Poverty

Two items snatched from today's news:

The number of people who filed unemployment claims last week dropped to the lowest level since May 2008, according to the Bureau of Labor Statistics.

At the same time, the U.S. Census said 48 percent of all Americans either live below the poverty line or fall into the low income category. That is 148 million people living in the wealthiest nation on earth.

Seems like we have a ways to go before we can accurately use the words economy and recovery in the same context. 

More Brilliant Economic Analysis

Downward revision of GDP growth a strong signal of stalled recovery

Los Angeles Times, August 27

Cisco's Chambers Tells The Truth

We need to get something straight about CEOs and their opinions on the U.S. economy: Their guess is no better than ours.

Most of them probably never took more than Econ 101 and 102 -- macro and micro -- and believe me those are far from the most challenging courses. I know because I got an "A" in both.

What CEOs really are talking about when they discuss the economy is how their customers plan to spend in relation to their perceptions of which way the winds will blow. So, CEOs base their opinions on what other CEOs think about what others CEOs believe and we dance in an endless spiral.

Occasionally, though, a big-time exec fesses up to the fact that's he's just guessing and I regain a smidge of confidence in how at least some companies are run. That happened today when I saw an AP interview with Cisco boss John Chambers. As he put it:

"If we were to poll [Cisco customers] I'm sure the average comes in at about 2 percent growth for the second half of the year. Doesn't mean that those customers are right, just that that's what on their mind in terms of their spending pattern. We're not making a call on the economy going down, I think the probabilities on a double dip, or whatever you want to call it, are relatively low."

 Useful information offered in context and candidly. I like it.